Meet my NEXT Financial Goal

The plan to overhaul and streamline my finances is well underway.  Now that my student loans have been paid I will focus on paying the mortgage on my rental property.  Only one of the rental properties has a mortgage, and the interest rate is 5.125%. 

$103,000 in 2009?  Sold!

Deal of the Decade

Be fearful when others are greedy and greedy when others are fearful.  Warren Buffett

This is an exciting rental property for me for several reasons, and it is a reminder about how important it is to have some dry powder tucked away to take advantage of a deal.

1. It was 2009.  The real estate market was in crisis.  D.R. Horton decided to stop development in this neighborhood due to slow sales.  The surrounding area was growing pretty fast, the fundamentals were good, but the builder wanted out.  This house was among the last spec homes built in the neighborhood, and contracts had fallen through with three previous buyers because financing was so hard to obtain during the housing crisis.  The price for this house was cut drastically.  Basically a fire sale.  I was able to buy it and add some nice interior upgrades for $103,000.  This is a 3 bedroom, 2 bath house.  To put it into perspective, I bought this exact model in a different neighborhood with fewer upgrades a year earlier for $28,000 more.
2. Now that the market has recovered, so has the area.  Another builder stepped in to buy the empty lots and is completing the build-out of the neighborhood.  A fancy grocery store and shopping center opened less than a mile away.  An apartment complex at the entrance to the neighborhood was recently purchased, and upgrades by the new owner have allowed for 20% higher rents at that complex.  Within a couple miles, dozens of retail stores and restaurants have opened.
3. After I bought the house I listed it for rent with a management company.  I immediately received an offer from a tenant but the tenant asked for a discount on the rent.  I figured I would make up the amount I was discounting by getting a tenant in the house right away, so I pulled the trigger.  Ten years later, the same tenant still lives in the house.

I am giddy every time I think about this - I've never had a tenant stick around for 10+ years.  I've steadily increased the rent, and while I still charge less than what I could get, there's huge value in keeping the same tenant (no turn costs, no vacancy costs, just a reliable rent check that is deposited into my account on time every single month).  The current rent is twice what my mortgage costs, so I'm comfortable with what I'm getting.

Time to Nix That Mortgage

With an interest rate of 5.125%, paying off the mortgage on this house is my next goal.  Today, I made a $2,000 extra payment.  I really like the feeling I get by reducing debt.  But more importantly, based on the current state of the real estate and stock markets, I sincerely feel this is the best use of my funds.  Real estate is expensive once again, and when there is a deal it is quickly bid up by professional investors with greater resources than me.  And the stock market is also pricey, especially considering we are due for a recession.  In addition to using cash flow to pay off this mortgage I am considering using some of the cash in my brokerage account.  

Paying off this mortgage offers a guaranteed 5% annual return.  That's a solid accomplishment.  Nothing to brag about, but certainly better under current market conditions.

My Frugal Miser - August Expenses: $17,229

August continued the trend of gluttonous spending.  Fortunately most of the spending was for our businesses, specifically the Airbnb.  I signed a contract for new siding and impact windows.  I made the first payment in August, with more to come once installation begins in October.  There were also some expenses related to my meeting job.  We signed up for a meeting in Nashville in September and I booked the hotel and flights last month.

Then there's our personal expenses.  First, the good:  I sold the two Madonna tickets for a solid profit.  I used a small part of the profit to buy two replacement tickets for one of her Miami concerts.  I also paid off my student loans completely, a $3,790 expense.  The Sonata has over 195,000 miles now.  Last month I bought two new tires and had a minor repair done.  It's almost time to start looking at replacing the car.  The not so good include our spending on food.  We took two short vacations and ate out a lot.  There's really no excuse for how much I spend on food.  We just need to be more frugal.  In Personal Care, I bought a TENS device that is supposed to help with pain.  I've been having a lot of foot pain and since we are doing several meetings in the coming weeks I want to try everything I can to alleviate it.

August Business Spending:  $13,800
August Personal Spending:  $3,429

August Expenses:  $17,229

$658 Auto (service, gas, insurance, AAA, etc.)

$0 Bank Fees
$347 Clothing/ Personal Care

($4,520) Fun (vacations movies, gambling, alcohol, concert tickets) income this month

$773 Food

$426 Health & Dental

$1,422 Household/Mortgage Payment/Home Repair

$0 Interest Expense

$3,790 Miscellaneous (Student loan overpayment)

$244 Taxes includes quarterly tax payments
$31 App Jobs Expenses (tolls, car washes, etc.)
$1,202 Unreimbursed Employee Expenses
$23 Reimbursed Employee Expenses income this month

$204 Utilities
$1,141  Rental Property Expenses
$11,404 AirBNB Expenses

My Frugal Miser - August Income: $8,723

There was a noticeable drop in my August income.  The biggest decline was in Airbnb bookings.  We had 11 vacant days last month.  I will have to more aggressively mark down rates if I want to keep the house occupied during slower times. 

I worked two meetings last month.  We took a couple of small trips during the month as Amazon was also slow.  See the trend?  August was slow!

August Income: $8,723

$60 Mystery Shopping
$1,367 Meeting Jobs
$108 Gig Apps (Rideshare, Scooter Charging, etc.)
$872 Amazon Deliveries
$4,040 Rental Income
$1,976 Airbnb Income
$66 Interest Income

$235 Other Sources

Investment Accounts Change in Value:  $8,437

August continued the trend of steady investment gains.  Even more impressive, much of my portfolio is in ultra-safe CDs.

Small Savings, Big Impact

Yesterday we wrapped up a two night, three day getaway to New Orleans.  I planned the trip around the Queen concert we attended Tuesday night.  Because of the irrational exuberance in Tampa, we were able to get better seats for significantly less cost in New Orleans.  Blame that on Ticketmaster's dynamic pricing algorithm.

For me, it's an exciting game to find and exploit deals and cost savings.  The reason we are able to afford to splurge once in a while on things like concert tickets is because small savings have a big impact.  You've heard about the "latte factor."  Here's a real example of the latte factor in practice:

I booked our flight during a sale on Southwest Airlines, and I redeemed points, so our only out of pocket cost on the flight was the Terrorist Fee ($5 and change per ticket).  Because we visited during August, a typically slow time for New Orleans, hotels were less expensive.  I found a nice hotel in a great location for $83/night.  When rates are that low, it usually doesn't make sense to redeem points for a free room.  I prefer to save our points to use on more expensive hotels or during peak periods when they are worth more.

One trick that I always use for hotel and car reservations is to keep checking rates even after I make the reservation.  A couple weeks before our trip, hotel rates had dropped even more.  We switched to the Residence Inn New Orleans Downtown, for $67/night, saving $34 + tax.  Plus, the Residence Inn offered free breakfast and an evening reception, which we were not going to have at the other hotel.

Heading to the airport, there were a couple choices I made to save money.  Since this was a short trip, using Lyft wasn't practical.  There's a toll road (the Selmon Expressway) that the GPS suggested, but since it was 5:30 in the morning, there was no traffic.  I took Adamo Drive, which runs parallel to the Selmon.  The distance was comparable and it may have added 3 minutes to our travel time at that early hour.  Saved about $3 by not taking the toll road.  At the airport, we parked across the street at A-1 Express.  It's not the cheapest off-airport lot, but it's the best.  It's $4/day less than parking at the airport, plus I get 15% of what I spend there back as a AAA rebate to offset the cost of our AAA membership.  Total savings including the rebate:  $15.60.

I booked the earliest flight into New Orleans on a Tuesday, and the latest flight out on a Thursday.  Those tend to be the least expensive times to fly (Saturday is also cheap, but it didn't fit into our plans).  Because most people don't like to save money, we had to share our flight from Tampa to New Orleans with 52 other travelers, meaning the plane was less than 1/3 full.  This meant we didn't have to share our row with other travelers.  The way I see things, booking the early flight meant we had an extra day to play in New Orleans.

We arrived in New Orleans before 8 AM.  Now, only fools rent cars if they are staying in New Orleans.  Parking is difficult and expensive.  At our hotel, parking a car would cost $39/night.  Taking a Lyft to the hotel was $40.  But even that was stupid.  The better choice:  we bought a day pass for the local bus for $3 each ($34 saved).  It's important to note that there are two buses that will take you from the airport into the city.  Only one of those, the 202, accepts the day pass.  The E2 is operated by a different company, so our pass would not be eligible for that trip.  Still, either option was a fraction of the cost of rideshare or renting a car, and the additional time it took to get to our destination was negligible.

Because of my Marriott status, I'm often able to snag an early check-in as long as a room is available.  Since as I mentioned, this is the slow season, there were of course rooms available.  We were able to check into our room at 8 AM.  This absolutely changed the quality of our day.   We were traveling only with backpacks, but who wants to tote that on your back in the muggy heat all day?  One unexpected benefit:  the front desk agent who checked us in invited us to enjoy the complimentary breakfast.

The three days we spent in New Orleans were amazing.  The joy of saving money here and there made it even more fun.  During our trip, I was able to show our AAA card to save on admission to a plantation we visited.  I purchased a Lyft ride pass for $5 to get $5 off each trip, which we used a couple times when public transit wasn't practical.  I really wanted to bring home some pralines, so I lucked out when I found a deal on Groupon to buy a dozen for $15 (plus 9% cash back on Rakuten/Ebates).  When we looked in stores, pralines were $2-$3 each.  And we used our Sunken Gardens membership to get free admission to the Longue Vue House and Gardens.

Amplify this example into our daily life, and the cost savings are tremendous.  As I said, it's a game that I enjoy playing.  I'm sure for some people it might be stressful to think about saving a couple dollars here and there, but the opposite is true for me:  the regret when I don't save ruins the experience, so I have to seek out the best deal to feel good about my choices.